Tuesday 20 March 2012

Parkson eyes 18 new stores in Malaysia by 2020

KUALA LUMPUR: Parkson Retail Asia Ltd (PRA), which operates department stores in Malaysia, Indonesia and Vietnam, expects to open as many as 18 new Parkson stores in Malaysia by 2020, in addition to the 37 stores currently.

The additional stores would provide the retailer an additional 2.16 million sq ft of retail space from a total of 4.2 million sq ft now.

This expansion is in line with PRA's target of opening at least two stores each year as well as its parent Parkson Holdings Bhd's (PHB) plan to own and manage 10 shopping complexes by 2020.

PHB recently announced a RM3 billion investment to develop its shopping management business. It targets to open 10 shopping centres under the Festival City brand.

PRA's executive director Toh Peng Koon said two Parkson department stores were slated to open this year - in Setia City Mall, Shah Alam, in May and in Nu Sentral, Kuala Lumpur, in the final quarter of this year.

"Besides these two, we have three more confirmed sites that will open over the next two years," Toh said.

Those outlets will be located in Plaza Merdeka in Kuching, KK Times Square in Kota Kinabalu and B8 Mall in Skudai, Johor.

On average, each store has a leasing area of between 120,000 sq ft and 150,000 sq ft.

"Our fit-out and renovation cost in each (leased) department store is usually RM6 million. The concessionaires will spend for their fit-out," Toh said.

Of its 37 outlets, Parkson's best performing store in terms of per sq ft is Parkson KLCC while the Parkson Pavilion derives the highest total sales. Its best performing suburban mall is its store at 1 Utama shopping centre.

Meanwhile, when asked about its performance in Malaysia, Toh said he expected Parkson to outperform the industry retail growth forecast.

The Malaysia Retailer Association (MRA) has made a 6.5 per cent growth forecast in 2012.

"We have witnessed this trend (surpassing MRA's projection) at Parkson for the past few years. We are seeing a 12 per cent same store growth," he said.

"Our profits are seeing even better growth because of our economies of scale. Every one per cent growth in the topline gives us a more than one per cent growth in the bottomline," Toh pointed out.

In the first half ended December 31, 2011, revenue from its retailing business rose to RM435.67 million from RM389.65 million the previous corresponding period.

Profit in the same period rose 41.16 per cent to RM77.14 million from RM54.64 million in first six months ended December 31, 2010.


Rubber making a serious comeback in the region

Commodities Talk

LONG perceived as a smallholder's crop, rubber has transcended into a hot commodity among the major world plantation players. In the past five-to-seven years, many players are making serious investment in the cultivation and also acquisitions of rubber plantations in South-East Asia and Africa.

The latest is Olam International Ltd, a commodity supplier partly-owned by Singapore's Temasek Holdings, which will initially invest about US$183mil in 28,000ha rubber plantations via a joint venture with the Gabon government, with the possibility of expanding to 50,000ha in the future.

Last year, two China-based companies, Mazhongdu International and Hainan Baisha Industrial, teamed up with Malaysia-based Hateg Corp to venture into rubber covering about 40,000ha in Indonesia, with an estimated investment of RM3.5bil within the next five years.

Malaysia, too, has become the target of China-based Guangdong Guangken Rubber, which has expressed interest to cultivate 10,000ha rubber in Sarawak, through a native customary land scheme.

So, given the renewed interest on rubber plantations, are local plantation companies going to join the bandwagon? Apparently, this is so.

TA Securities, in its latest report, said rubber had been gaining traction with mid-sized plantation companies like United Malacca Bhd and TSH Resources Bhd expressing interest to expand into rubber cultivation.

United Malacca is targeting 30% rubber plantation in terms of planted area in the next five to 10 years from its 100% oil palm currently.

TSH, meanwhile, plans to plant 1,000ha to 1,500ha of rubber annually in the next three years. According to analysts, Kuala Lumpur Kepong Bhd is believed to top in terms of rubber plantations estimated at 20,930ha among listed plantation companies.

Apart from the initiative by the private sector, the Government is also pledging serious commitment to rubber under the Rubber National Key Economic Area with some RM275mil investment.

In Malaysia, currently 94% of the total rubber production is contributed by smallholders.

The Government is also actively promoting replanting programmes and allocating more funds to beef up rubber-growing zones in Peninsular Malaysia.

Sabah and Sarawak are also making inroads in new and larger rubber planting hectarage totalling about 30,000ha under the Ninth Malaysia Plan. It is reported that Sarawak has about 1.5 million ha and Sabah some 400,000ha available for rubber cultivation.

In 2012, active replanting activities would cover about 38,000ha per year in the peninsula while new plantings would cover about 5,000ha each in Sarawak and Sabah.

Interestingly, rubber cultivation in Malaysia is no longer just skewered towards latex production. There is growing versatility of rubber from latex for tyre and rubber glove to rubberwood for furniture making which in turn are multi-billion ringgit integrated rubber industry.

The Malaysian Rubber Board (MRB) via the Rubber Research Institute, for example, has been producing high quality timber latex clones such as the RRIM 900 series, RRIM 2000 series and the latest RRIM 3000 series, that have resulted in high-yielding latex and bigger girth trunks for timber production.


REIT: Mid Valley Megamall, Gardens Mall

The real estate investment trust (REIT) offering by IGB Corp Berhad could fetch valuations of between RM4.3 billion and RM4.6 billion for the two prime retail malls currently held under IGB’s subsidiary KrisAssets Holdings Bhd.

Sources said the deal is structured on a capitalisation rate of 5.3%
Mid Valley Megamall has a net lettable area (NLA) of over 1.7 million sq ft spread across five levels of retail space. Apart from that, it also houses a 48,300 sq ft exhibition space.

The large retail mall has over 430 tenants, anchored by its major tenants Carrefour hypermarket, Golden Screen Cinemas, Jaya Jusco and Metrojaya.

Mid Valley recorded over 35 million visitors in 2010 and had an occupancy rate of 99.86%.

The Garden Mall, is a five-storey shopping complex with an NLA of about 800,000 sq ft.

Most of its 200 tenants are upper-mid to upper-range retail boutiques, and food and beverage outlets while its anchor tenants are GSC Signature cinema, Cold Storage supermarket, Robinsons and Isetan department stores.

Following a recent revaluation (end of December 2011) of the two retail malls, The Gardens Mall and Mid Valley Megamall now have a combined revised market value of about RM3.29 billion.

Separately, the revised market value for Mid Valley Megemall is RM2.36 billion while The Gardens Mall’s revised market value was RM930 million
Based on earlier calculation by The Edge Financial Daily, Pavilion KL is valued at RM2,390 psf based on the REIT’s purchase consideration of RM3.19billion and the NLA of 1.335 million sq ft.

However, Pavilion KL mall’s appraised value is even higher at RM3.415 billion or RM2,558 psf.

A simple calculation of KrisAssets’ malls shows that the RM2.36 billion revised market value for both malls translates into roughly RM944 psf, which is grossly undervalued compared with Pavilion REIT.

Neverthelss, analysts concur that if the REIT exercise prices the two malls at up to RM4.6 billion, the valuation would be around RM1,840 psf – still lower than Pavilion REIT’s pricing.

Analysts concur that the potential REIT exercise, if it materialises, would provide a big boost to KrisAssets, which is 75.66% owned by IGB.

“KrisAssets’ current market capitalisation of RM3.11 billion means there is a potential upside of at least RM1.2 billion assuming the retail REIT is packaged at RM4.3 billion.

Abstracted from The Edge Daily 20 March 2012

30% female board directors

The government of Malaysia came up with a policy for Corporate Malaysia to have at least 30 per cent of its boardroom members comprise women by 2016, from about eight per cent.

Responding to a query made by a shareholder, the Board of a listed company in Malaysia responded in the AGM:

Board diversity is good, including gender representation. However, Board diversity should be in terms of expertise, experience and skills and not gender per se. There should not be a target or quota for lady Directors on the Board, as it will be both discriminatory and ineffective to appoint lady Directors just to fulfill a certain target.
Well said...

Monday 19 March 2012

Greenyield Berhad on BFM 89.9

One of the stocks in the portfolio "stocks that I like"

4000 acres of rubber plantation (1000 acres wholly-owned, 30% in JV with Melati Aman for the remaining 1000 acres).

1000 acres fully developed another 1000 acres completed middle this year.

Yield of rubber tree after the trees mature:
1st year 1.2 ton-1.3ton / hectare, subsequent years 2.2 ton – 2.4ton/ hectare

Revenue RM25000/ hectare/ year

6 years from planting before the trees start to yield

Capex: RM1-2 million on machinery RM1-2 million for mould, will increase the plant pot production capacity by 50%

Friday 16 March 2012

Maxwell International Holdings Ltd

Maxwell reported sales totaling RM386 million in 2011, up 15% from the previous year on the back of both higher volume sales and average selling prices. Volume sales totalled 12.6 million shoe pairs, up 11.6% from the previous year. boosted by orders from two new trading house customers.

Recall that the majority of Maxwell's customers are trading houses and brand distributors, who in turn service a wide range of global brand names including Yonex, Diadora, Kappa, Hush Puppies, Brooks, FILA and most recently, Li Ning.

Net profit was up by a lower 7.2% to RM69.9 million in 2011. Margins were lower, primarily due to higher discounts on bulk volume orders. Nonetheless, net margin remains at a pretty solid 18.1%.

As an OEM (original equipment manufacturer) and ODM (original design manufacturer), Maxwell is more or less buffered against volatility in raw material prices. The company earns a manufacturing margin by pricing its products on a cost plus basis.

Its business model will benefit from the trend of out-sourcing manufacturing activities, which is expected to continue as brand owners turn their focus to research and development, sales, marketing and distribution.

In this respect, the outlook for Maxwell is less uncertain given the fickle and rapidly changing consumer preferences.

Maxwell has indicated it would maintain a 20% profit payout ratio, which would imply dividends totalling 3.5sen per share based on last year's profit. If so, share holders would earn an attractive net yield of 8.7% at the prevailing price of 40sen.

IPO price RM0.54
2011 EPS 8.3sen
Estimated DPS 3.5sen
Net asset/ share RM0.79
Net cash RM212.2 million

The Edge Financial Daily, 16 March 2012

Monday 12 March 2012

About PPB Group Bhd

Contribution from Wilmar made up close to 75% of PBB's pre-tax profits of RM1.06 billion in FY2011. Stripping out the one-off gain from the disposal of sugar business, Wilmar's numbers would have made up 60% of PBB's pre-tax earning in FY2010.

Some 70% of PBB's RM19.8 billion market capitalisation is made up of its 18.33% stake in Wilmar, which had a market cap of S$31.4 billion (RM75.4 billion) at the time of writing

This effectively means that PPB's own businesses which generated RM228million in earnings on the back of RM2.71 billion in sales last year are worth RM6 billion.

Its massive war chest is being put to good use for expansion in China, Indonesia, Malaysia and Vietnam.

PPB's own businesses include its flour milling operations at FFM Bhd, which is doubling its flour milling capacity in Indonesia and began selling Massimo bread in the Klang Valley last July.

The inability to completely pass on the higher cost of wheat to consumers has been eating into the margins of FFM, it's largest in-house operation.

While growth could come from the swap of a 20% stake in FFM for a 20% stake in Wilmar's existing and new flour mills in China, and future expansion tie-ups like the joint venture in Vietnam, returns would take time.

Some 70% of the RM507 million capital PPB has committed through 2014 goes into growing the flour business.

Other PBB businesses are easily missed due to their relative size within the group. PBB markets its own consumer products like cooking oil (Neptune, Seri Murni and Krystal brands); canned and frozen food under the Marina brand; beverages under the Shamu brand; and Blue Key flour while Seri Murni also produces table eggs and curry paste.

PPB's distribution network is also used to market third-party products like Lingham's Chili Sauce, V-Soy soya milk, Clorox bleach and Johnson & Johnson personal care products. Margins are thin in this segment, though, generating only RM19 million in earnings on RM375 million in sales last year.

Golden Screen Cinemas Sdn Bhd (GSC), Malaysia's leading cinema operator, with some 40% market share that made RM37 million in profit on a turnover of RM283 million last year. Some RM130 million has been set aside for 11 cinema openings planned through 2014, some of which will cater for smaller but burgeoning cities.

For the environmental-engineering and waste-management segment, which made RM9.8 million in pre-tax profit on RM154 million in revenue last year, some RM8.5 million has been set aside as capital expenditure.

Over the next year or two, it may be the property segment that proves worth watching. Another 100 million could be set aside in 3Q2012 to expand the property business, which has an earmarked capex of RM13.5 million.

PPB's ongoing developments have an estimated gross development value of RM250 million. Numbers will be better this year as there were no new launches last year.

But what is giving the property division new space for expansion is its recent acquisition of Cathay Screen Cinemas Sdn Bhd, now 100% owned by PPB. That gave it 10 properties with a total land area of over 400,000 sq ft in Kedah, Penang, Perak, Selangor, Johor, sabah and Sawarak.

"Most of the properties are stand-alone cinemas, which have been closed and are currently leased out for retail purposes, except for a tract in Taman Megah (Petaling Jaya) and a 36-shoplot office block in Damansara Jaya, Selangor."

The tract in Taman Megah near Ming Tien Food Court, on which a badminton court now stands, it could potentially be turned intoa condominium-cum-retail mall, but nothing has been finalised.

PPB also owns and manages three retail and commercial properties: Cheras LeisureMall, a fully occupied suburban mall with 261,000 sq ft of lettable space; Cheras Plaza (office, commercial and entertainment); and the New World Park retail complex in Penang with 87,000 sq ft of lettable area. Cheras LeisureMall is carried at RM53.41 million in its books.

PBB has RM877 million in net cash (74 sen per share).

Wilmar emerged as a 10% shareholder of Australian Securities Exchange listed Goodman Fielder Ltd, Australia's biggest baking company with consumer businesses that Wilmar saw as complementary to its own.

Wilamr said to be among suitors for a stake in Gavillion Group LLC, a grains trader with a sizeable fertilizer business.


Abstracted from The Edge Weekkly 12 March 2012.

Wednesday 7 March 2012



The trading volume of Greenyb was at record high for the period of past 5 years. Tham and family hold more than 50% of the company shares

Looking at the movement of share price and trading volume, is something brewing in Greenyb?

The time indicated in this blog is GMT-0800. To get the local time in Malaysia, add 16 hours